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Advocacy Groups Defend Tornado Cash Developer in Legal Dispute
On April 5, three prominent blockchain advocacy groups submitted amicus curiae briefs in support of Roman Storm, the developer of Tornado Cash, who is facing criminal charges in the United States. These filings are intended to bolster Storm’s motion to dismiss the charges brought against him, while also presenting compelling arguments aimed at safeguarding developers from similar legal actions in the future.
Legal Arguments:
The Blockchain Association, one of the advocacy groups involved, has pointed out what it considers to be a “critical flaw” in the government’s case against Storm. According to Marisa Tashman Coppel, head of legal at the Blockchain Association, the government’s classification of Tornado Cash as an unlicensed money transmitter is unfounded. Coppel insists that, based on relevant statutes and regulations, money transmitters must have full independent control over user assets, a criterion that Tornado Cash and its developers do not meet.
“Without the ability to independently move funds on a user’s behalf, one cannot be a money transmitter.”
Unlike traditional money transmitters, Tornado Cash operates using self-executing and immutable smart contracts, meaning that users retain control over their assets at all times. The platform and its developers do not have access to user funds since they are managed by non-custodial smart contracts within pools.
CoinCenter, another advocacy group, echoes similar sentiments, suggesting that the US government wrongly accused the developers of Tornado Cash of criminal conspiracy. Peter Van Valkenburg, CoinCenter’s Director of Research, emphasizes the role of smart contract-based pools in the platform’s operations, thereby minimizing the active involvement of developers. Valkenburg draws parallels between Tornado Cash and software tools like TurboTax, which offer functionality to users without engaging in the actual execution of financial transactions.
Furthermore, CoinCenter presents legal arguments supporting software publication as a form of free speech while advocating for statutory exemptions for informational transactions. It likens Tornado Cash to SWIFT, a financial messaging platform, emphasizing that both platforms should be shielded from direct legal repercussions as they primarily handle information dissemination rather than actual financial transactions.
The DeFi Education Fund, the third advocacy group involved, emphasizes that developers should not be held liable for criminal activities carried out by third parties using their software. Amanda Tuminelli, the group’s Chief Legal Officer, notes that the US government’s use of the International Emergency Economic Powers Act (IEEPA) in this context is unprecedented and unaligned with past enforcement practices.
In a comprehensive review of recent cases, the DeFi Education Fund found no instances in which developers were held accountable for sanctions violations linked to counterparties, a clear distinction from the circumstances surrounding Tornado Cash.
Recent Developments:
Storm and his legal team submitted a motion to dismiss the criminal charges on March 29, with each advocacy group providing amicus curiae filings in support of this motion. The outcome of this motion remains uncertain as the legal proceedings are still in their early stages. Storm was charged by the US Department of Justice in August 2023 and is currently out on bail awaiting his trial in September.
In a related development, another Tornado Cash developer, Roman Semenov, who was also charged by the US Department of Justice, remains at large. The platform itself was sanctioned by the US Treasury and OFAC in August 2022, alleging extensive money laundering activities totaling over $7 billion, with a fraction of these funds linked to the North Korean state-sponsored group Lazarus Group.
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